Adrian Marsh: ING Group

With a sevenfold increase in profits, ING is turning its back on tougher times. Husnara Begum finds out how a management restructure and the new legal panel is helping

Although the bitter taste of the large-scale redundancies that hit ING Group in November 2002 still lingers, there is increasing evidence of a recovery at the Dutch financial services giant.

In the first quarter of 2004, ING’s net profit rose more than sevenfold from €167m (£111m) to €1.2bn (£797.5m), on the back of record earnings in the group’s banking division. Meanwhile, operating profits jumped an impressive 32 per cent to €1.19bn (£790.9m), boosted by a 7 per cent rise in US insurance premiums and continued growth at ING Direct, the phone and internet banking subsidiary.

ING’s impressive results will no doubt have pleased the group’s new chairman, Michel Tilmant, who took over from Ewald Kist on 1 June. Tilmant, the first non-Dutchman to run ING, has already overhauled the group’s management structure in a further effort to boost profitability by slashing costs.

The group is hoping that the new management structure, which is organised along six business lines – insurance Americas, insurance Europe, insurance Asia-Pacific, wholesale banking, retail banking and ING Direct – will improve transparency and accountability.
The regional executive committees for Europe, the Americas and Asia/Pacific and the local management committees, which should shorten reporting lines, are aimed at improving flexibility for fast decision-making.

The effect of the new structure on ING’s in-house legal function is still unknown, although ING’s UK head of legal Adrian Marsh admits that his team of six lawyers and one paralegal is in a state of flux. “It’s too early to say how things are going to pan out over the next six months and how it will impact on the legal department, but I imagine there’ll be some form of restructuring,” says Marsh.

Marsh, who is responsible for ING’s wholesale banking division in the UK, reports to the organisation’s group general counsel Jan Willen Vink. “It’s all organised on a rather decentralised basis. I have responsibility for wholesale banking in the UK but not for ING Direct, asset management and so on,” says Marsh.

Marsh also denies that the restructuring will result in a reduction in the number of lawyers within ING, noting that the numbers have already dropped quite a bit during the past three years.

One casualty of the sea change at the group was Piers Roberts, the UK head of legal of ING Barings’ investment banking business. As first reported by The Lawyer in May, Roberts was made redundant after approximately 10 years at ING because investment banking was no longer one of the group’s core business areas.

Vink joined ING in May 2003 from cross-border exchange business Euronext Amsterdam. His appointment finally resulted in the launch of ING’s first-ever global panel. ING first announced that it was establishing a legal panel in November 2002, but the process was set back when the former general counsel Diederik van Wassenaer moved to another role within the group.

ING launched the global panel to slash legal costs and to allow the general counsel’s department to exert more influence over the choice of firms working on the group’s transactions. Prior to the creation of the global panel, ING bankers had near total autonomy when choosing external lawyers for deals. “We had relationships with hundreds of firms globally and there was precious little central control over which ones were being used,” says Marsh.

As Marsh’s team is relatively small, it farms out a considerable amount of legal work to external advisers and routine financial markets work is also handled in-house.

As first reported by The Lawyer in November 2003, Vink awarded places on ING’s global panel to Allen & Overy, Clifford Chance, Freshfields Bruckhaus Deringer, Linklaters and Lovells. Additionally, Dutch firm De Brauw Blackstone Westbroek won a joint place with US firm Sullivan & Cromwell (The Lawyer, 5 November).

Surprisingly, Herbert Smith’s Benelux alliance firm Stibbe, which counted ING as one of its key clients, failed to win a place on the global panel. US firms Latham & Watkins and Milbank Tweed Hadley & McCloy, which historically advised ING on securitisation work, also missed out.

Marsh says that ING was very happy with the way the review panned out. “I thought the review went very well and we were all pleasantly surprised as to how responsive and receptive the firms were. It was also interesting to get an overview of the sort of things on which firms were advising ING globally,” he says.

However, Marsh glosses over the question of whether the creation of the global panel has achieved its principal aim – the reduction of ING’s legal bill. He says: “It’s still early days. The panel has only been in place for six months.”

In April, ING completed a series of follow-up meetings with the group’s panel firms to see what work they had done. This is now going to be followed up by six-monthly reviews, but Marsh does not expect any radical changes to the panel for at least another 18 months.

Marsh, who took over responsibility for managing ING’s relationship with external legal advisers in the UK following Robert’s departure, is now seeking to formalise ING’s relationship with firms in the UK.
Currently, ING does not have a fixed roster of advisers in the UK and each business has its own list of preferred firms.

For example, Marsh allows staff in the wholesale business to outsource work to Ashurst, Herbert Smith, Norton Rose, Simmons & Simmons, Watson Farley & Williams and a number of others without pre-approval. The wholesale business also farms out IT/IP and HR work to Holborn-based firm Marriott Harrison and Baker & McKenzie respectively.

Marsh says: “The long-term aim is to have a restricted list for the entire UK business. There are obvious efficiencies if, for example, ING Direct instructs the same lawyers as we do.”

The lion’s share of ING’s own account work has been farmed out to Lovells. For example, the City firm’s Hong Kong office advised ING on the disposal of the group’s Asian equities business. Lovells has also won the mandate to advise ING on the sale of German-based BHF Bank to Commerzbank. The latter deal, which was announced last month, is a further example of ING’s cost-cutting measures introduced by Tilmant. However, Marsh stresses that describing Lovells as ING’s sole legal adviser on the group’s own account work is inaccurate. “Lovells does not have a prerogative over all our own account work,” he says.
Adrian Marsh
Head of legal for UK wholesale business
ING Group

Organisation ING Group
Sector Banking and finance
Employees 15,000
Legal capability 396 (including compliance personnel)
Head of legal for UK wholesale business Adrian Marsh
Reporting to Jan Willem Vink, group general counsel
Main law firms Allen & Overy, Clifford Chance, De Brauw Blackstone Westbroek, Freshfields Bruckhaus Deringer, Linklaters, Sullivan & Cromwell